Sud Energie, controlled by British state-owned emerging markets power generator Globeleq, has signed a deal to build the new 200 megawatt (MW) Memve'ele hydropower station in Cameroon.
Cameroon, the most industrialised of the six members of Central Africa's CFA franc monetary union, suffers crippling electricity shortages despite its enormous hydropower potential.

Memve'ele is one of a series of projects planned to raise Cameroon's power output to about 2 000 MW by 2015, from barely 900 MW now, to meet demand rising by around 8 percent a year.

"This project is really important for the economy of our country. You know that we are facing serious energy problems every day. It on a daily basis affects our industries, our enterprises and household use," Finance Minister Polycarpe Abah Abah told Reuters after a signing ceremony late on Wednesday.

"That is why I think the signing of this convention is a giant step in resolving this energy crisis that very negatively impacts our economic growth," he said.

The project involves building a dam on the Ntem river in Cameroon's South province, a road to the site, a power plant and electricity transmission lines to link it to the national grid.

Guillaume Rivron, business development manager for Bermuda-registered Globeleq, said work should start in 2008 and the plant should start generating electricity by 2013.

"It will be realised through the build, operate and transfer principle, with a concession of 20 years, after which we will transfer management to the government of Cameroon," he said.

Rivron could not give a total cost for the project. A study by the Cameroon government in 2005 estimated it could cost about 142,3-billion CFA francs.

Globeleq was founded in 2002 by Britain's CDC, a private equity fund investor formerly known as the Commonwealth Development Corporation, to generate safe, reliable power in emerging markets in Africa, the Americas and Asia.

CDC, owned by the British government, owns 100 percent of Globeleq, which in turn controls Bermuda-based Sud Energie.

Rivron said Sud Energie was expected to meet 30 percent of the cost with additional financing coming from the Development Bank of Central African States, African Development Bank, Dutch Development Bank, Arab Development Bank and Multilateral Investment Guarantee Agency.

Officials said Canadian aluminium producer Alcan would buy 50 MW of Memve'ele's output to power a planned expansion at its local ALUCAM unit, and the Cameroon rubber company, HEVECAM, would buy a further 20 MW.

Neighbouring Equatorial Guinea had also agreed to buy 50 MW of its output, and Gabon may follow suit, they said.

Cameroon depends on hydropower for 95 percent of its power. Only 5 percent of the country's rural population and 65 percent of urban dwellers have access to electricity.

Power utility AES-Sonel, a unit of US-based AES Corp, has raised output to over 900 MW over the last three years but that is still far short of demand, and the company expects to add 50 000 more connections in the next 15 years.

Last year AES-Sonel, 44 percent owned by Cameroon, secured 260-million euro in loans arranged by the World Bank's International Finance Corporation private sector lender in one of the biggest such deals in sub-Saharan Africa